TO THE MEMBERS
The Directors submit the SIXTEENTH ANNUAL REPORT on the business and operationsof the Company together with the Standalone and Consolidated Audited Financial Statementsfor the year ended 31st March 2019.
Rs in Lacs
|Particulars ||Standalone ||Consolidated |
| ||2018-19 ||2017-18 ||2018-19 ||2017-18 |
|Gross Revenue from operations ||36104.24 ||31319.97 ||36104.24 ||31319.97 |
|Other Income ||440.44 ||359.99 ||852.04 ||382.50 |
|Total Revenue ||36544.68 ||31679.96 ||36956.28 ||31702.47 |
|Operating expenses ||33256.37 ||29668.98 ||33306.81 ||29745.96 |
|Profit before interest ||3288.31 ||2010.98 ||3649.47 ||1956.51 |
|Depreciation Tax and Amortization (EBIDTA) || || || || |
|Finance Costs ||1363.63 ||1664.36 ||1444.09 ||1793.98 |
|Depreciation and amortization expenses ||217.52 ||246.94 ||204.14 ||295.39 |
|Add : Share of (Loss) of Associates & Joint Ventures (after tax) ||NA ||NA ||- ||- |
|Profit/(Loss)before exceptional item and tax ||1707.16 ||99.68 ||2001.24 ||(132.86) |
|Exceptional item ||(130.75) ||(112.51) ||(130.75) ||(134.38) |
|Profit/(Loss) before taxation ||1576.41 ||(12.83) ||1870.49 ||(267.24) |
|Taxation (including ||379.31 ||(302.86) ||379.31 ||(299.04) |
|Deferred Tax) || || || || |
|Profit/(Loss)after ||1197.10 ||290.03 ||1491.18 ||31.80 |
|Taxation (PAT) || || || || |
|Other Comprehensive ||(84.32) ||15.27 ||(591.95) ||109.48 |
|Income || || || || |
|Total ||1112.78 ||305.30 ||899.23 ||141.28 |
|Comprehensive Income for the period Comprising profit/(loss) & Other comprehensive Income for the period || || || || |
During the year under consideration Company achieved the highest ever production of82340 M.T. as against 73600 M.T. in the previous year recording a surge of 11.88%. Thedemand for ferro alloys principally is determined by developments within the StainlessSteel industry. The global stainless steel market size was valued at USD 93.69 billion in2018 and is expected to witness a CAGR of 5.2% from 2019 to 2025. Rising demand fromend-use industries such as automotive oil and gas and construction is anticipated topropel the growth. Stainless steel caters to demand from various application segments suchas building and construction heavy industries consumer goods and others. StableStainless Steel industry scenario augurs well for the ferro alloys industry. Exports areat Rs 124.41 crores as against Rs 111.01 crores in the previous year and during the yearunder review foreign currency earnings in rupee terms was Rs 24.60 crores. The Companyderived 34.55% of its total sales from exports.
On account of above and other factors the profit before tax was at Rs 17.07 crore ascompared to Rs 1.00 crore in the previous year.
In view of the pooling the funds for OTS with banks the Directors regret theirinability to recommend any dividend for the financial year ended 31st March2019 on Equity Shares of the company.
The paid up Equity Share Capital as on 31st March 2019 is Rs19.55 crores. During theyear under review the Company has not issued any shares. The Company has not issuedshares with differential voting rights. It has neither issued employee stock options norsweat equity shares and does not have any scheme to fund its employees to purchase theshares of the Company.
EXTRACT OF THE ANNUAL RETURN
An extract of annual return for the financial year ended on 31st March 2019in Form MGT-9 pursuant to Section 92 (3) of the Companies Act 2013 and Rule 12 (1) of theCompanies (Management and Administration) Rules 2014 is attached as
Annexure-1. The same is available on website of the Company www.facoralloys.com in"Investor" section.
NUMBER OF MEETINGS OF THE BOARD
The Board met four times in FY 2018-19 viz. on 18th May 2018 11thAugust 2018 12th November 2018 and 13th February 2019. The maximuminterval between any two meetings did not exceed 120 days.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Companies Act 2013 and implementation requirements of IndianAccounting Standards (IND-AS') under Companies Act 2013 on accounting anddisclosure requirements and as prescribed by SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Audited
Consolidated Financial Statements are provided in this Annual Report.
Pursuant to Section 129 (3) of the Companies Act 2013 read with Rule 5 of theCompanies (Accounts) Rules 2014 the statement containing salient features of thefinancial statements of the Company's Subsidiaries and Associates' (in amended Form AOC-1)is attached to the financial statements as Annexure-2. The company will makeavailable the Annual
Accounts of the subsidiary companies and related detailed information to any member ofthe Company who may be interested in obtaining the same. The annual accounts of theCompany and that of the respective subsidiary companies as well will also be kept open forinspection at the Registered of the Company. Further the Consolidated FinancialStatements presented by the Company include the financial results of the subsidiarycompanies.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to provisions under Section 134 (5) of the Companies confirm:Act2013yourDirectorshereby (i) that in the preparation of the annual accounts for thefinancial year ended 31st March 2019 the applicable accounting standards readwith requirements set out under schedule III of the Companies Act 2013 have been followedand there are no material departures from the same; (ii) that they have selected suchaccounting policies and applied them consistently and made judgments and estimates thatwere reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company at the end of the financial year and of the profit for the year underconsideration;
(iii) that they have taken proper and the maintenance of adequate accounting records inaccordance with the provisions of the Companies Act 2013 for safeguarding the assets ofthe Company and for preventing and detecting frauds and other irregularities; (iv) thatthey have prepared the annual accounts of the
Company for the financial year ended 31st March 2019 on a going concernbasis;
(v) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and(vi) that they had devised proper system to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
DECLARATION GIVEN BY INDEPENDENT DIRECTORS
The Independent Directors have given declaration that they meet the criteria specifiedunder Section 149 (6) of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (Listing Regulations).
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The amended Policy of the Company on Directors' appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a Directorand other matters provided under sub-Section (3) of Section 178 is attached as
Annexure-3 to this Report.
AUDITORS AND AUDITORS' REPORT Statutory Auditors
The Auditors' Report to the Shareholders on the Standalone Audited Financial Resultsfor the year under review contains the following qualification :-
The Company has defaulted in repayment of Rs 2104.61 lacs (as on 31st March2019) to the Bank of India against devolvement of SBLC amounting to Rs 6089.76 lacs on 3rdAugust 2015 provided by the bank for the term loan by the overseas lender to one of theoverseas subsidiary of the Company. The devolved amount is secured by the firstfixedassets of the company chargeonthe by deposit of title deeds in respect of immovableproperties. The company has received demand notice dated 20th February 2017from the lender of Cati Madencilik Ithalat Ve Ihracat A.S.
(Tier II subsidiary) against the corporate guarantee given by Facor Alloys Limitedtowards its borrowing amount USD 1.5 million. The lender has offered one time settlement(OTS) vide its letter dated 17.01.2019 for payment of USD 1.188 million.
Management Note :
On the request of Company Bank of India Visakhapatnam had issued a SBLC for 10Million USD in favour of Bank of
India Jersy for sanctioning a loan of 10 Million USD to Facor
Minerals (Netherlands) B.V. one of the oversea subsidiary of the
Further SBLC was devolved/invoked due to non re-payment of loan amount to Bank of Indiaby oversea subsidiary due to non operation of the project and the total amount of SBLC wasdebited to Company's bank A/c by Bank of India Vizag. For satisfaction of liability toBank of India including of care the SBLC for obligations of the company and tosettle the outstanding amount of Rs 27.05 crores as on 31-03-2019 the company approachedto Bank of India Visakhapatnam who vide its letter Ref. no. BOI/ VSKP/2019-20/32dtd.19.06.2019 read with letter Ref. no. BOI/ VSKP/2019-20/34 dtd. 21.06.2019 and no.BOM/VSKP/2019-20/37 dtd. 24.06.2019 communicated its acceptance for proposal of compromisesettlement. The salient features of the compromise settlement are given as under:- i) Cutback amount of Rs 4.42 crores received by the BOI up to 31-05-2019 is treated asapplication money and form part of the OTS amount. ii) Rs 10.00 crores out of outstandingamount of Rs 21.28 crores (Rs 27.05 crores-Rs 5.77 crores towards Cut back amountincluding Rs 1.35 crore towards incentive for quick payment) is to be paid by 29-06-2019.iii) Balance amount of Rs11.28 crores is to be paid by 18-09-2019 on monthly installmentsbasis. iv) Failure of the company to pay any of the agreed amount as per terms of sanctionwill terminate OTS proposal and the amount recovered till such date will be treated asnormal recovery and the entire contractual amount will be due for payment as if no OTS isagreed and appropriate recovery action to be initiated as per bank's norms. The Companyhas already repaid the amount as per the above schedule and the balance amount may also becleared by 18-09-2019 as agreed.
Further Company had given a corporate guarantee as a collateral security for USD 1.6Million in favour of Bank of India London for borrowings made by Cati MadencilikIthalat Turkey a step down second level subsidiary.
Cited Corporate Guarantee was devolved/invoked by said bankdue fulfillmentof obligationfor payment of interest/ non-repayment of loan amount by overseas subsidiary on due dateson account of non-operation of the project. Further in fulfillment of the guaranteeobligations of the company and to settle the outstanding Term Loan amount of USD1188401.29 of Cati Madencilik Ve Ithalat Ve Ithracat A.S. the company approached to Bankof India London who vide its letter Ref.no.LON:ADV:DA:18-19:625 dtd.17.01.2019communicated its acceptance for proposal of compromise settlement. The salient features ofthe compromise settlement are given as under:- i) 50% of outstanding USD 1188401.29 amounti.e. USD 594200.29 is to be paid within 15 days from the date of acceptance letter. ii)Balance 50% amount of USD 594200.29 is to be paid in six equal monthly installments of USD99033.33 each following the month of payment of 1st part (50% of OTS) mentioned in (i)above. iii) In the event of non-payment of the above advised OTS amount as per the advisedrepayment terms bank shall continue recovery process against the company and corporateguarantor-Facor Alloys Limited.
The Company has deposited the entire amount of settlement with BOI Visakhapatnam foronward remittance to BOI London after compliance of RBI requirements.
Secretarial Auditor reservations or adverse remarks or Thereare noqualificationsdisclaimers made in the Secretarial Audit Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
The Company has not provided any guarantee made a Loan and investment pursuant toSection 186 of the Companies Act 2013 during the Financial Year.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
There are no contracts/arrangements/transactions which are not at arm's length basisand there are no material contracts/ arrangements/transactions which are at arm's lengthbasis.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY AFTERCLOSE OF THE FINANCIAL YEAR
There are no material changes and commitments affecting financial position of thecompany which have occurred between the end of the financial year to which the financialstatements relate and the date of the report.
DISCLOSURE OF INTERNAL FINANCIAL CONTROLS
The Internal Financial Controls with reference to financial statements as designed andimplemented by the Company are adequate and commensurate with the size and scale of itsoperation. The internal controls are tested for adequacy efficiency and effectivenessthrough audits by the internal auditors and the observations corrective and preventiveactions are reviewed by the management and Audit Committee of the Board of Directors.
During the financial year under review no material or serious observation has beenreceived from the Internal Auditors of the Company for inadequacy or ineffectiveness ofsuch controls.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNAL
There are no significant and/or material orders passed by the Regulator(s) or Court(s)or Tribunal(s) impacting the going concern status of the Company and its businessoperations in future.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information required under Section 134 of the Companies
Act 2013 read with Companies (Accounts) Rules 2014 are set out in Annexure-4hereto forming part of this report.
RISK MANAGEMENT POLICY
The Company's Risk Management framework is designed to identify assess and monitorvarious risks related to key business and strategic objectives and lead to the formulationof a mitigation plan. Major risks in particular are monitored regularly at
Executive meetings and the Board of Directors of the Company is kept abreast of suchissues.
DISCLOSURE AS PER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The Company has formed a Committee and adopted a policy on prevention prohibition andredressal of sexual harassment at workplace in line with the provisions of the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013 and theRules thereunder.
CORPORATE SOCIAL RESPONSIBILITY
Pursuant to Section 135 of the Companies Act 2013 read with the Companies (CorporateSocial Responsibility Policy) Rules 2014 your Company at the Board Meeting held on 29thMay 2014 approved a Policy on CSR and the Policy was hosted on the website of theCompany.
Company is not having average net profits in the immediately preceding three years.
ANNUAL BOARD EVALUATION
Pursuant to the provisions of the Companies Act 2013 and
Regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 Independent Directors at their meeting without the participation of theNon-independent Directors and Management considered/evaluated the Boards' performancePerformance of the Chairman and other Non-independent Directors. The Board subsequentlyevaluated its own performance the working of its Committees (Audit Nomination andRemuneration and Stakeholders Relationship Committee) and Independent Directors (withoutparticipation of the relevant Director).
TRANSFER OF UNCLAIMED EQUITY SHARES TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)SUSPENSE ACCOUNT
Pursuant to the provisions of Section 125 of the Companies Act 2013 the outstandingamount of dividend which remained unpaid or unclaimed for a period of seven years andshares whose dividend was unpaid/unclaimed for seven consecutive years have beentransferred by the Company from time to time on due dates to the Investor Education andProtection Fund. During the year under review the Company has credited Rs638495/- tothe Investor Education and Protection Fund (IEPF) pursuant to Section 125 of the CompaniesAct 2013/ Section 205C of the Companies Act 1956 read with the Investor Education andProtection Fund (Awareness and Protection of Investors) Rules 2001.
During the year under review the Company has also transferred 805142 Equity Sharesto the Investor Education and Protection Fund (IEPF) relating to 2384 shareholders of theCompany whose dividend were unclaimed/unpaid for seven consecutive years pursuant toSection 125 of the Companies Act 2013 read with the Investor Education and ProtectionFund (Awareness and
Protection of Investors) Rules 2001 and the Investor Education and Protection FundAuthority (Accounting Audit Transfer and Refund) Rules 2016.
The details of shares/shareholders in respect of which dividend has not been claimedand transferred to the IEPF as required are provided on our website www.facoralloys.comand on the website of the Ministry of Corporate Affairs.
Any person whose unclaimed or unpaid amount has been transferred by the Company toIEPF may claim his refunds from the IEPF authority. For claiming such amount claimantneeds to file Form IEPF-5 along with requisite documents. The detailed procedure forclaiming shares and Dividend Amount is available on the website of IEPF (www.iepf.gov.in).
The Nodal Officer for the purpose of IEPF is Company and the website address iswww.facoralloys.com.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
Pursuant to Section 177 (9) of the Companies Act 2013 read with Rule 7 of theCompanies (Meetings of Board and its Powers) Rules 2014 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board of Directors had approved the Policyon Vigil Mechanism/Whistle Blower and the same was hosted on the website of the Company.This Policy inter-alia provides a direct access to the Chairman of the Audit Committee.affirms that no Director/ employee has been Companyhereby denied access to the Chairman ofthe Audit Committee and that no complaints were received during the year.
The Company has not invited any deposit from public during the year.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
In terms of the provisions of Section 197 (12) of the Companies Act 2013 read withRules 5 (2) and 5 (3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 during the year under review there were no employees receivingremuneration of or in excess of Rs10200000/- per annum or Rs 850000/- per monthrequiring disclosure.
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act 2013 read with Rule 5 (1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided in the Annexure formingpart of the Annual Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Mr. Rohit Saraf Director retires by rotation at the forthcoming
Annual General Meeting and being eligible offers himself for re-appointment.
The terms of Mr. R. K. Saraf Mr. Ashim Saraf and Mr. Anurag Saraf as ManagingDirector/Joint Managing Directors was/is up to 31st March 2019 and 31stJanuary 2023 respectively. The Board of Directors on the recommendation of the Nominationand Remuneration Committee has re-appointed Mr. R. K. Saraf Mr. Ashim Saraf and Mr.Anurag Saraf as Managing Director/Joint Managing Directors respectively of the Company fora period of 3 (three) years with effect from 01st April 2019 subject toapproval of shareholders. The first term of office of Mrs. Urmila Gupta as IndependentWoman Director will expire on 12th February 2020.
The Board has recommended re-appointment of Mrs. Urmila Gupta as Independent WomanDirector of the Company for a second term of 5 (five) consecutive years.
The Company has received declarations from Mrs. Urmila Gupta the Independent WomanDirector of the Company confirming that she meets the criteria of independence prescribedunder the Act and the Listing Regulations.
The Company has formulated a code of conduct for all members of the Board and SeniorManagement Personnel. All concerned members/executives have affirmed compliance with thesaid code.
SECRETARIAL AUDIT REPORT
The Company has appointed Mr. Umesh Chand Sharma of
Umesh Chand Sharma & Co. New Delhi Company Secretaries to conduct secretarialaudit and his Report on Company's Secretarial Audit is appended to this Report as Annexure-5.
Management Discussion and Analysis Corporate Governance
Report and Certificate from Practicing Company Secretary regarding compliance ofconditions of Corporate Governance are made a part of the Annual Report.
The Audit Committee formed by the Board of Directors of the
Company consists of Mr. K. Jayabharat Reddy Mr. K.L. Mehrotra & Mr. A.S. Kapre whoare Non-Executive Independent Directors of the Company and Mr. R.K. Saraf. Mr. K.Jayabharat Reddy is its Chairman. The Committee's role terms of reference and theauthority and powers are in conformity with the requirement of the Companies Act 2013 andthe Listing Regulations.
Pursuant to provisions of Section 139 of the Companies Act
2013 read with the Companies (Audit and Auditors) Rules 2014 M/s K K Mankeshwar &Co. Chartered Accountants (Firm Registration no.106009W) were appointed as StatutoryAuditors for a term of 5 years to hold office from the conclusion of 14th AGMheld on 20th September 2017 upto the conclusion of the 19th AGM tobe held in 2022.
The statutory auditor has confirmed their eligibility and submitted the certificate inwriting that they are not disqualified to hold the office of the statutory auditor.
Mr. Prakash Uppalapati Cost Accountant has been appointed by the Board as Cost Auditorof the Company to conduct audit of cost records of the Company for the year ended 31stMarch 2019. Pursuant to the provisions of Section 148 of the Companies Act 2013 and theRules made there under
Members are requested to consider the ratification of the remuneration payable to Mr.Prakash Uppalapati.
The due date for filing of the Cost Audit Report for the financial year 2017-18 was 30thSeptember 2018. The Company has filed the Report with the Ministry of Corporate Affairson 29
COMPLIANCE WITH SECRETARIAL STANDARDS
The Board of Directors affirms that the Company has complied with the applicableSecretarial Standards issued by the Institute of Company Secretaries of India (SS1 andSS2) respectively relating to Meetings of the Board and its Committees which are mandatoryin nature.
During the year under review the overall industrial relations in the Company remainedcordial.
ACKNOWLEDGEMENT AND APPRECIATION
Your Directors place on record their gratitude for the support and cooperation receivedfrom Central and State Governments
Financial Institutions & Banks Customers Suppliers and
Shareholders and for their continued support. The Board also expresses its sincereappreciation to the dedicated and committed team of employees and workmen.
| ||On behalf of Board of Directors |
|Place : Noida (U.P.) ||R.K. SARAF |
|Dated : 14th August 2019 ||Chairman & Managing Director |
|- || |